UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934 (Amendment

(Amendment No.    )

Filed by the Registrantþ

  ☒                            Filed by a Party other than the Registrant¨  ☐

Check the appropriate box:

KIRKLAND’S, INC.

(Name of Registrant as Specified in its Charter)

NOT APPLICABLE

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

W. Michael Madden

President and Chief Executive Officer

May 4, 2015April 28, 2017

Dear Shareholder:

It is my pleasure to invite you to attend our Annual Meeting of Shareholders. The meetingShareholders, which will be held at 9:00 a.m., local time, on Friday, June 4, 2015 at 2:00 p.m. Central Time2, 2017 at the Company’s headquarters, 5310 Maryland Way, Brentwood, TNTennessee 37027. The doors will open at 8:30 a.m., local time. Our directors and management team will be available to answer questions.

The Notice of Annual Meeting, and Proxy Statement and proxy card accompanying this letter describesdescribe the business to be conducted at the meeting. Our 2016 Annual Report to Shareholders, which is not a part of our proxy solicitations materials, is also enclosed. We encourage you to read our Annual Report.

IfWe hope you plan to attend the meeting and you hold your shares in registered form and not through a bank, brokerage firm or other nominee, please mark the appropriate box on your proxy card. If you plan to attend and your shares are held by a bank, brokerage firm or other nominee, please send written notification to our Investor Relations Department, Attention: Adam Holland, at our headquarters address set forth above, and enclose evidence of your ownership (such as a letter from the bank, brokerage firm or other nominee confirming your ownership or a bank or brokerage firm account statement). The names of all those indicating they plan to attend will be placed on an admission list held at the registration desk at the entranceable to the meeting.

It is important that your shares be represented at the meeting; regardless of the number you may hold.join us. Whether or not you plan to attend, if you hold your shares in registered form, please sign, date and return your proxy card as soon as possible. If, on the other hand, you hold your shares through a bank, brokerage firm or other nominee, please sign, date and return to your bank, brokerage firm or other nominee the enclosed voting instruction form, or if you prefer, you can vote by telephone or through the Internet in accordance with instructions set forth in the enclosed voting instruction form. If you attend the meeting, your shares will be voted as instructed in your proxy, or you may withdraw your proxy at the meeting and vote your shares in person.

I look forward to seeing you on June 4.at the Annual Meeting.

Sincerely,

W. Michael Madden

President and

Chief Executive Officer

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

Friday, June 4, 20152, 2017

2:9:00 p.m. Central Timea.m. local time

Kirkland’s Corporate Office

5310 Maryland Way

Brentwood, TN 37027

May 4, 2015April 28, 2017

Dear Shareholder:

You are invited to the 2017 Annual Meeting of Shareholders (the “Annual Meeting”) of Kirkland’s, Inc. We will hold the meeting at the time and place noted above. At the meeting, we will ask you to:

Your vote is important. To be sure your vote counts and assure a quorum, please vote, sign, date and return the enclosed proxy card or voting instruction form whether or not you plan to attend the meeting; or if you prefer and if you hold your shares through a bank, brokerage firm or other nominee, please follow the instructions on the enclosed voting instruction form for voting by Internet or by telephone whether or not you plan to attend the meeting in person. The record date for voting eligibility at the Annual Meeting was the close of business on April 6, 2017.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON JUNE 4, 2015.2, 2017.

THE NOTICEAND PROXY STATEMENTANDTHE ANNUAL REPORTTO SHAREHOLDERSARE AVAILABLEAThttp://ir.kirklands.com/Annual_Meeting.

By order of the Board of Directors,

Adam C. Holland Carter R. Todd

Vice President, Chief Financial Officer General Counsel

and Corporate Secretary

IMPORTANT

It is important that your shares be represented at the Annual Meeting. You are cordially invited to attend the Annual Meeting in person. If you plan to attend the Annual Meeting, you must have an admission ticket or other proof of share ownership as of the record date.

You will not be admitted to the Annual Meeting without proper identification (such as a driver’s license or passport) and either proof of your ownership of Kirkland’s common stock or proof that you hold a valid proxy from a shareholder who held Kirkland’s common stock as of the record date of the Annual Meeting.

Registration will begin at 1:8:30 p.m.a.m., Central Daylight Time.local time. Please allow ample time forcheck-in. Please bring proper identification and evidence of either your stock ownership or the grant of any valid proxy you hold with you in order to be admitted to the Annual Meeting. If your shares (or the shares of the shareholder who granted you the proxy) are held in the name of a bank, broker, or other nominee holder and you plan to attend the Annual Meeting in person, please bring a copy of your broker statement, the proxy card mailed to you by your bank or broker or other proof of ownership of Kirkland’s common stock (or the equivalent proof of ownership as of the close of business on the record date of the shareholder who granted you the proxy). For information on requirements relating to voting your shares in person at the Annual Meeting, see “Item I — Information About Voting” on page 1 of the accompanying Proxy Statement.

Cameras, cell phones, recording equipment, and other electronic devices will not be permitted at the meeting.

Table of Contents

i

I. INFORMATION ABOUT VOTING

Solicitation of Proxies

OurThe Board of Directors (the “Board of Directors” or the “Board”) of Kirkland’s, Inc. (“Kirkland’s” or the “Company”) is soliciting proxies for use at our annual meetingAnnual Meeting of shareholdersShareholders to be held on June 4, 20152, 2017 (the “Annual Meeting”) and any adjournments of that meeting. We first mailed this proxy statement, the accompanying form of proxy and our Annual Report to Shareholders for our fiscal year ending January 31, 201528, 2017 (“fiscal 2014”2016”) on or about May 4, 2015.April 28, 2017.

Agenda Items

The agenda for the Annual Meeting is to:

Who Can Vote

You can vote at the Annual Meeting if you are a holder of our common stock, no par value per share (“Common Stock”), on the record date. The record date is the close of business on April 9, 2015.6, 2017. You will have one vote for each share of Common Stock. As of April 9, 2015,6, 2017, there were 17,314,27815,911,248 shares of Common Stock outstanding and entitled to vote.

How to Vote

For Shares Held Directly in the Name of the Shareholder

If you hold your shares in registered form and not through a bank, brokerage firm or other nominee, you may vote your shares in one of two ways:

For Shares Held Through a Bank, Brokerage Firm or Other Nominee

If you hold your shares through a bank, brokerage firm or other nominee, you may vote your shares in any one of three ways:

Use of Proxies

Shareholders of record receive the proxy materials, including a proxy card, from the Company, whereas shareholders who beneficially own their shares through a bank or brokerage firm in “street name” will receive the proxy materials, together with a voting instruction form, from the bank or broker. If you are a shareholder of record, unless you tell us on the proxy card to vote differently, we plan to vote signed and returned proxiesFORthe nomineesnominee for director,FOR the approval of Ernst & Young LLP as the Company’s independent registered public accountant for fiscal 2015,FOR the ratification of the compensation of the named executive officers, as disclosed in this proxy statement, pursuant to an advisory vote on executive compensation,FOR the determination, on an advisory basis, to have future advisory votes on executive compensation every one year, andFOR the amendments toratification of Ernst & Young LLP as the Amended and Restated Charter of the Company to adopt majority voting in uncontested director elections.Company’s independent registered public accountant for fiscal 2017. We do not now know of any other matters to come before the Annual Meeting. If they do, proxy holders will vote the proxies according to their best judgment.

Shareholders who hold their shares in street name should refer to “BrokerNon-Votes” below for information concerning the voting of their shares on any matter for which they do not provide instructions to their bank or broker, either by returning a completed, dated and signed voting instruction form in the envelope provide,provided, or by telephone or Internet as provided elsewhere herein.

Quorum Requirement

We need a quorum of shareholders to hold a valid Annual Meeting. A quorum will be present if the holders of at least a majority of the outstanding Common Stock entitled to vote at the Annual Meeting either attend the Annual Meeting in person or are represented by proxy. Brokernon-votes and votes withheld are counted as present for the purpose of establishing a quorum.

Vote Required for Action

Directors are elected by a plurality vote of shares present in person or represented by proxyif the votes cast “FOR” exceed the votes cast “AGAINST” at the Annual Meeting. Shares represented by proxies that withhold authority to voteMeeting (with abstentions and brokernon-votes not counted as votes cast either for or against such election). Proxies may not be voted for more than one director, and shareholders may not cumulate votes in the election of directors will not be counted in the election of directors in favor of any nominee and will have no effect on the director election.directors.

The advisory vote on executive compensation and the ratification of Ernst & Young LLP (“EY”) as our independent registered public accountants for fiscal 2015, the advisory vote on executive compensation, the amendment of the Amended and Restated Charter of the Company to adopt majority voting in uncontested director elections,2017, and any other actions properly presented at the Annual Meeting are approved if the votes cast in favor of the action exceed the votes cast opposing the action. The vote on the frequency of future advisory executive compensation votes will be determined by a plurality of the votes cast.

Shares represented by proxies that are properly marked “abstain”“ABSTAIN” will be counted for purposes of determining the presence of a quorum at the 20152017 Annual Meeting. Shares represented by proxies that abstain from voting on the advisory vote on executive compensation, the frequency vote on future advisory executive compensation votes, or the ratification of EY as our independent registered public accountant for fiscal 2015, the advisory vote on executive compensation, or the amendments to the Amended and Restated Charter to adopt majority voting in uncontested director elections,2017, will not have any effect on the outcome of those votes.

BrokerNon-Votes

A brokernon-vote occurs when banks or brokerage firms holding shares on behalf of a shareholder do not receive voting instructions from the beneficial owner of the shares by a specified date before the Annual Meeting and do not have discretionary authority to vote those undirected shares on specified matters under applicable stock exchange rules. The election of directors,a director, the advisory vote related to named executive officer compensation, and amendmentthe advisory vote on the frequency of the Amended and Restated Charter of the Companyfuturenon-binding votes related to adopt majority voting in uncontested director electionsnamed executive officer compensation are considerednon-routine

matters and bank / broker discretionary voting on these matters is prohibited. As a result, if you are a beneficial owner, and hold your shares in street name, and do not give your broker or other nominee

instructions on how to vote your shares with respect to the election of directors, the advisory vote on executive compensation, or the amendmentadvisory vote on the frequency of the Amended and Restated Charter to adopt majority voting in uncontested director elections,future votes on executive compensation, no votes will be cast on your behalf with respect to those proposals. In contrast, the ratification of auditors is a discretionary matter, so your broker or nominee will be permitted to exercise discretionary authority to vote your shares with respect to the ratification of our selection of EY as our independent registered public accounting firm even if you do not give your broker or other nominee instructions on how to vote your shares with respect to that proposal. Shares with respect to which brokers do not have authority to vote may still be counted in determining whether a quorum is present.

Because the Company has a pluralitymajority voting standard for the election of directors, and the other proposals will be approved if the votes cast in favor of the action exceed the votes cast opposing the action, brokernon-votes will have no effect on the outcome of the vote on any of the proposals contained in this Proxy Statement.

Revoking a Proxy or Changing Your Vote

For Shares Held Directly in the Name of the Shareholder

If you hold your shares in registered form and not through a bank, brokerage firm or other nominee, you may revoke your proxy at any time before it is exercised. You can revoke a proxy by:

Kirkland’s, Inc.

5310 Maryland Way

Brentwood, TN 37027

Attention: Adam C. Holland

Vice President, Chief Financial Officer and Corporate Secretary

; or

For Shares Held Through a Bank, Brokerage Firm or Other Nominee

If you hold your shares through a bank, brokerage firm or other nominee, you may change your vote at any time by:

II. THE PROPOSALS TO BE VOTED ON

Proposal 1 — Election of Directors

Our Board of Directors consists of three classes of directors, each class with two or three directors. The term for each class is three years. Class terms expire on a rolling basis, so that one class of directors is elected each year. Currently, there are nineeight incumbent directors, consisting of threetwo in Class IIII whose terms will expire at this Annual Meeting, three in Class IIII whose terms will expire at the 20172018 Annual Meeting and three in Class II whose terms will expire at the 20162019 Annual Meeting. One of our current Class III directors, Carl Kirkland (whose information is also provided below), intends to retire as a director and will not stand forre-election, effective as of the Annual Meeting.

The nomineesnominee for Class III director this year are Steven J. Collins, R. Wilson Orr, III and Miles T. Kirkland.is Jeffery C. Owen. Information about the nominees,nominee, the continuingincumbent directors not standing forre-election, current vacancies on the Board of Directors, and the Board of Directors generally is contained in the next section of this proxy statementProxy Statement entitled “Board of Directors.”

The Board of Directors expects that each of the nomineesnominee will be able and willing to serve as directors.director. If anythe nominee is not available, the proxies may be voted for another person nominated by the Board of Directors to fill the vacancy, or the size of the Board of Directors may be reduced. In the event that a director fails to receive the number of votes required for reelection to the Board, the Company’s Governance and Nominating Committee will make a recommendation to the Board of Directors as to whether the Board of Directors should accept the director’s resignation or take such other action as the Governance and Nominating Committee may recommend. The Board of Directors will act on the Governance and Nominating Committee’s recommendation and publicly disclose its decision and the rationale behind such decision within ninety (90) days after certification of the election results.

The Board of Directors recommends a vote “FOR” the election of Steven J. Collins, R. Wilson Orr, III and Miles T. KirklandJeffery C. Owen to the Board of Directors.

Proposal 2 — Advisory Vote Related to Executive Compensation

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) enables our shareholders to vote to approve, on an advisory(non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the Securities and Exchange Commission’s (“SEC”) rules.

As described in detail under the heading “Executive Compensation – Compensation Discussion and Analysis” on page 18, our executive compensation programs are designed to attract, motivate, and retain our named executive officers, who are critical to our success. Under these programs, our named executive officers are rewarded for the achievement of strategic goals and the realization of increased shareholder value. Please read the “Executive Compensation – Compensation Discussion and Analysis” for additional details about our executive compensation programs, including information about the fiscal 2016 compensation of our named executive officers.

We are asking our shareholders to indicate their support for our named executive officer compensation as described in this proxy statement. This proposal, commonly known as a“say-on-pay” proposal, gives our shareholders the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we will ask our shareholders to vote “FOR” the following resolution at the Annual Meeting:

“RESOLVED, that the Company’s shareholders hereby approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the 2017 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosure.”

Thesay-on-pay vote is advisory and is therefore not binding on the Company, the Compensation Committee or our Board of Directors. Our Board of Directors and our Compensation Committee value the opinions of our

shareholders and to the extent there is any significant vote against the named executive officer compensation as disclosed in this proxy statement, we will consider our shareholders’ concerns, and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.

The Board of Directors recommends that you vote “FOR” this Proposal 2 to approve the compensation of the named executive officers as disclosed in this proxy statement.

Proposal 3 — Advisory Vote on the Frequency of the Advisory Vote on Executive Compensation

In accordance with the Dodd-Frank Act, we are asking our shareholders to determine, on an advisory basis, the frequency with which we will include in future annual proxy statements a shareholder advisory vote on the compensation of our named executive officers. Consistent with the views of our shareholders expressed in 2011 when we previously held this vote, we have held an advisory vote on named executive officer compensation every year since 2011.

As discussed in Proposal 2, the Board of Directors values the input of shareholders regarding the Company’s executive compensation practices. As contemplated by the Dodd-Frank Act, shareholders are also invited to express their views on how frequently advisory votes on executive compensation, such as Proposal 2, will occur. Shareholders can advise the Board of Directors on whether such votes should occur every year, every two years, or every three years or may abstain from voting.

After careful consideration of this Proposal 3, our Board of Directors has determined that an advisory vote on executive compensation that occurs every year is the most appropriate alternative for the Company, and therefore our Board of Directors recommends that the shareholders vote for aone-year interval for the advisory vote on executive compensation.

In formulating its recommendation, our Board of Directors considered that an annual advisory vote on executive compensation will allow our shareholders to provide us with their direct input on our compensation philosophy, policies and practices as disclosed in the proxy statement every year. Additionally, an annual advisory vote on executive compensation is consistent with our policy of seeking input from, and engaging in discussions with, our shareholders on corporate governance matters and our executive compensation philosophy, policies and practices. We understand that our shareholders may have different views as to what is the best approach for the Company, and we look forward to hearing from our shareholders on this Proposal 3.

Please mark on the Proxy Card your preference as to the frequency of holding shareholder advisory votes on executive compensation, as either every year, every two years, or every three years or you may mark “abstain” from this proposal.

Approval of this Proposal 3 requires the affirmative vote of a plurality of the votes cast on this matter. If you abstain from voting on this matter, your abstention will have no effect on the outcome of the vote. Brokernon-votes will not impact the outcome of this matter. While this vote is advisory and therefore not binding on us, our Board values the opinions of our shareholders and will take into consideration the outcome of this vote when making future decisions regarding our executive compensation programs. The Board may decide that it is in the best interests of our shareholders and the Company to hold an advisory vote on executive compensation more or less frequently than the option approved by our shareholders.

TheBoardofDirectorsrecommendsthatyouvote“FOR”afrequencyofonceeveryyearforthefrequencyofshareholderadvisoryvotesonexecutivecompensation.

Proposal 4 — Ratification of Independent Registered Public Accounting Firm

Our audit committee (the “Audit Committee”)Audit Committee has selected Ernst & Young LLP (“EY”)EY as our independent registered public accounting firm to perform the audit of our consolidated financial statements for the fiscal year 2015.2017. In deciding to engage EY, our Audit Committee noted that there were no auditor independence issues raised with EY.

Our Board of Directors recommends that the shareholders ratify the selection of EY as our independent registered public accounting firm. This appointment will be submitted to our shareholders for ratification at the Annual Meeting. The submission of the appointment of EY is required neither by law nor by our bylaws. Our Board of Directors is nevertheless submitting it to our shareholders to ascertain their views. If our shareholders do not ratify the appointment, the selection of another independent registered public accounting firm will be considered by our Board of Directors. If EY shall decline to accept or become incapable of accepting its appointment, or if its appointment is otherwise discontinued, our Board of Directors will appoint another independent registered public accounting firm.

Our Audit Committee reviews audit andnon-audit services performed by EY, as well as the fees charged by EY for such services. In its review ofnon-audit service fees, the Audit Committee considers, among other things, the possible effect of the performance of such services on the auditor’s independence. Additional information concerning the Audit Committee and its activities with EY can be found in the following sections of this proxy statement: “Board Committees:“Information About the Board of Directors and Corporate Governance: Audit Committee,” at page 10, and “Audit Committee Report” at page 34.33. For additional information about EY see “Independent Registered Public Accounting Firm” on page 33 of this proxy statement.Proxy Statement.

The Board of Directors recommends a vote “FOR” the ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year 2015.

Proposal 3 — Advisory Vote Related to Executive Compensation

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) enables our shareholders to vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the SEC’s rules.

As described in detail under the heading “Executive Compensation – Compensation Discussion and Analysis” on page 17, our executive compensation programs are designed to attract, motivate, and retain our named executive officers, who are critical to our success. Under these programs, our named executive officers are rewarded for the achievement of strategic goals and the realization of increased shareholder value. Please read the “Executive Compensation – Compensation Discussion and Analysis” for additional details about our executive compensation programs, including information about the fiscal 2014 compensation of our named executive officers.

We are asking our shareholders to indicate their support for our named executive officer compensation as described in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives our shareholders the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we will ask our shareholders to vote “FOR” the following resolution at the Annual Meeting:

“RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the 2015 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosure.”

The say-on-pay vote is advisory and is therefore not binding on the Company, the Compensation Committee or our Board of Directors. Our Board of Directors and our Compensation Committee value the opinions of our shareholders and to the extent there is any significant vote against the named executive officer compensation as disclosed in this proxy statement, we will consider our shareholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.

The Board of Directors recommends that you vote “FOR” this Proposal 3 to ratify the compensation of the named executive officers as disclosed in this proxy statement.

Proposal 4 — Amendment of the Amended and Restated Charter of the Company to adopt Majority Voting in Uncontested Director Elections

At the 2014 Annual Meeting of Shareholders, the shareholders voted in favor of a non-binding proposal to implement majority voting in uncontested director elections. The Board of Directors has taken the vote of the shareholders into account and has determined to make the necessary changes to the Company’s Amended and Restated Charter (the “Charter”) to carry out the will of the shareholders. In order to implement this change, the Company must obtain shareholder approval to several amendments of the Charter. In this respect, the Board has approved and has recommended that shareholders approve the following amendments be to the Charter:

“9.2Election. Except in the case of vacancies, directors shall be elected by the shareholders. Each director shall be elected by the majority of the votes cast with respect to the director by the shares entitled to vote in the election at any meeting of the shareholders called for the purpose of the election of directors at which a quorum is present, provided that if as of a date that is ten (10) days in advance of the date the Corporation files its definitive proxy statement (regardless of whether or not thereafter revised or supplemented) with the Securities and Exchange Commission, the number of nominees exceeds the number of directors to be elected, the directors shall be elected by a plurality of votes cast by the shares entitled to vote in the election.

For the purposes of Section this 9.2, a “majority of the votes cast” means that the number of shares voted “for” a director must exceed the number of votes “against” with respect to that director.”

3.

Section 9.2.2 (to be renumbered as Section 9.3.2) would be amended to read as follows:

“9.3.2Term. At each annual meeting of shareholders of the Corporation, directors of classes the terms of which expire at such annual meeting shall be elected for terms of three years.”

“9.6.Resignations. Any director of the Corporation may resign at any time by giving written notice to the Board of Directors, to the Chairman of the Board of Directors, to the President, or to the Secretary of the Corporation. Such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. In the event that a director fails to receive the number of votes required for reelection to the Board of Directors, the Governance and Nominating Committee of the Board of Directors will make a recommendation to the Board of Directors as to whether the Board of Directors should accept the director’s resignation, reject the director’s resignation or take such other action as the Committee may recommend. The Board of Directors will act on the Committee’s recommendation and publicly disclose its decision and the rationale behind such decision within ninety (90) days after certification of the election results.”

The Board of Directors unanimously recommends that you vote “FOR” the amendment of the Amended and Restated Charter to adopt majority voting in uncontested Director elections.2017.

III. BOARD OF DIRECTORS

NomineesNominee for Director

Class III — Term Expiring in 2020

Jeffery C. Owen

PrincipalOccupation: Executive Vice President of Store Operations and Store Development for Dollar General Corporation.

Age: 47

DirectorSince: 2015

Mr. Owen rejoined Dollar General in June of 2015 as Executive Vice President of Store Operations and Store Development. Prior to his departure from Dollar General in 2014, Mr. Owen had spent over 20 years with Dollar General, the nation’s largest small box retailer of discount consumable basic merchandise. At the time of his departure, he had served as the Senior Vice President, Operations from 2011 to 2014, and prior to that time he was Vice President, Operations for Dollar General from 2006 to 2011. Mr. Owen received his undergraduate degree and M.B.A. from Vanderbilt University. Mr. Owen is a retail industry executive who brings to the board years of operations and public-company management experience.

Directors Continuing in Office

Class I — Term Expiring in 2018

Steven J. Collins

PrincipalOccupation: Managing Director of Advent International, a private equity investment firm.

Age: 4648

DirectorSince: 2004

Mr. Collins has been a director of Kirkland’s, Inc. since November 2004. Mr. Collins is a Managing Director of Advent International.International, a global private equity firm focused on international buyouts, growth and strategic restructuring. Mr. Collins joined Advent in 1995 and rejoined after graduate school in 2000. Mr. Collins served as Kirkland’s Chief Financial Officer from January 1997 to February 1998 and its Treasurer from January 1998 to December 1998. Before joining Kirkland’s, Mr. Collins was an Associate at Advent International from 1995 to 1997. Mr. Collins also serves onis a member of the Boardboard of Directorsdirectors of Bojangles’, Charlotte Russe, lululemon athletica, and Party City Holdings, all of which are publicly traded, and served onCharlotte Russe, a privately-owned retailer of women’s apparel. He was a member of the board of directors of Five Below throughInc., a publicly-traded specialty retailer from 2010 until March 2015. Mr. Collins received a B.S. from the Wharton School of the University of Pennsylvania and an M.B.A. from Harvard Business School. Mr. Collins brings substantial retail experience to our Board of Directors (from his roleroles at Party City and Five Below in particular), and contributes insight into appropriate Board of Directors roles and corporate governance issues based on the directorships he has held and continues to hold.

R. Wilson Orr, III

PrincipalOccupation: Chairman of the Board of Directors;Directors, Managing Partner of SSM Partners, a private equity investment firm, and a principal of SSM Corporation.

Age: 5254

DirectorSince: 1996

Mr. Orr has been Chairman of our Board of Directors since March 2006. Since 1993, Mr. Orr has been a Managing Partner of SSM Partners, a private equity investment firm. He joined SSM Partners in 1988 as a Vice President. From 1984 to 1988, Mr. Orr worked in corporate lendingfinance at Chemical Bank. Mr. Orr received a B.S. degree from Vanderbilt University. Mr. Orr brings significant experience to our Board of Directors having served and continuing to serve on numerous other boards and assisting management with a full range of responsibilities including long-term strategic planning.

Miles T. Kirkland

PrincipalOccupation: Senior Vice President and Portfolio Manager for Truxton Trust, a private bank and wealth management services company.

Age: 4345

DirectorSince: 2008

Mr. Kirkland is Senior Vice President and Portfolio Manager for Truxton Trust, a private bank and wealth management services company based in Nashville, TN. From 2010 until April 2013, Mr. Kirkland was a Principal with Mastrapasqua Asset Management, a private asset management firm, where he previously served as a Senior Research Analyst and Associate Portfolio Manager from 2007 to 2010. He joined Mastrapasqua Asset Management in 2000 as a Research Analyst. Before joining Mastrapasqua, he spent three years working with Kirkland’s in store operations. He received a B.A. in English from The University of the South in 1994 and an M.B.A. from Vanderbilt University Owen Graduate School of Management in 2000. Mr. Kirkland is also a CFA Charterholder. Mr. Kirkland brings to the Board his experience as an employee of Kirkland’s (in store operations), as well as his general business experience, which enable him to accurately assess our performance and advise on new strategies.

Directors Continuing in Office

Class II — Term Expiring in 20162019

Murray M. SpainSusan S. Lanigan

PrincipalOccupation: Retired Co-FounderExecutive Vice President and General Counsel of Dollar Express,Chico’s FAS, Inc.

Age: 7154

DirectorSince: 20012016

Mr. Spain was the co-founder of Dollar Express, Inc. and acted

Ms. Lanigan currently serves as itsExecutive Vice President and Chief Operating Officer from its inception in 1961 until May 2000, when Dollar Express merged with Dollar Tree Stores, Inc. At that time, Dollar Express was a chainGeneral Counsel of 126 retail stores in five states. Mr. Spain graduated from Temple University with a BA in accounting in 1965. Mr. Spain’s extensive experience in managing a retail business and operating over one hundred stores over five states enables him to evaluate our business and identify potential opportunities for growth and improvement.

Ralph T. Parks

Principal Occupation: President of RT Parks,Chico’s FAS, Inc., a publicly traded clothing retailer, a position to which she was named in May of 2016. She also serves as the Chair of the Tennessee Education Lottery Corporation, a position to which she was appointed by the Governor of the State of Tennessee in 2014. Ms. Lanigan joined Dollar General Corporation in 2002 as Vice President, General Counsel and Secretary, and in 2005 she was promoted to Executive Vice President. She retired from Dollar General in 2013. Prior to joining Dollar General, Ms. Lanigan served as Senior Vice President, General Counsel and Secretary at Zale Corporation, a specialty retailer of New Balance^® footwearfine jewelry. Prior to her time at Zale, Ms. Lanigan held legal positions with Turner Broadcasting System, Inc., a media conglomerate and apparel.

Age: 69

Director Since: 2004

Mr. Parks serveddivision of Time Warner that manages cable networks and properties, and the law firm of Troutman Sanders LLP. Ms. Lanigan is a retail industry executive who brings to the board years of public-company management and legal experience. Her experience as the interim Chief Executive OfficerGeneral Counsel and as a senior executive officer of Heelys, Inc. from February 2008 until May 2008, but has otherwise been retired since 1999 after a 34-year careerthree different public companies in the retail industry including eight yearsassists the Company with corporate governance issues as Chief Executive Officer of Footaction, USA, an athletic footwearwell as strategy and apparel retailer. Since 2002, he has served as President of RT Parks, Inc., a retailer of New Balance^® footwear and apparel. Mr. Parks also serves on the board of directors of Hibbett Sporting Goods, Inc. Mr. Parks’ experience in the retail industry – both in the board room and as an executive officer – contributes to the Board of Directors’ ability to assess our performance and to develop appropriate oversight mechanisms and initiatives.operational issues.

W. Michael Madden

PrincipalOccupation: President and Chief Executive Officer of the Company.

Age: 4547

DirectorSince: 2015

Mr. Madden has served as the Company’s President and Chief Executive Officer since February 2015. Prior to that, Mr. Madden served as Senior Vice President and Chief Financial Officer since January 2008 and Vice President and Chief Financial Officer since May 2006. Prior to his appointment as Chief Financial Officer, Mr. Madden served as Vice President of Finance from May 2005 to April 2006. From July 2000 to May 2005, he served as Director of Finance. Prior to joining Kirkland’s, Mr. Madden served as Assistant Controller with Trammell Crow Company and was with PricewaterhouseCoopers LLP. At PricewaterhouseCoopers LLP, he served in positions of increasing responsibility over six years culminating as Manager-Assurance and Business Advisory Services where he worked with various clients, public and private, in the retail and consumer products industries. Mr. Madden’sday-to-day leadership as President and Chief Executive Officer, as well as his many years of experience in the retail industry, provide him with deep knowledge of our operations and give him unique insights into the challenges and opportunities we face.

ClassCharlie Pleas, III — Term Expiring in 2017

Robert E. Alderson

PrincipalOccupation: Private Investor.Senior Vice President and Controller of AutoZone, Inc.

Age: 6852

DirectorSince: 19862016

Mr. Alderson has been a Director of Kirkland’s since September 1986 and served as the Company’s Chief Executive Officer from February 2006 to February 2015. He also served as Chief Executive Officer of Kirkland’s from March 2001 to May 2005. He served as President of Kirkland’s from April 2008 to February 2015, from February 2006 to March 2006 and from November 1997 to May 2005. He served as Chief Operating Officer of Kirkland’s from November 1997 through March 2001 and as Vice President orPleas was elected Senior Vice President and Controller of Kirkland’sAutoZone, Inc., a retailer of automotive parts and accessories, during 2007. Prior to that, he was Vice President and Controller since joining in 1986 through November 1997. He also served as Chief Administrative Officer2003. Previously, he was Vice President – Accounting since 2000, and Director of Kirkland’s from 1986 to 1997.General Accounting since 1996. Prior to joining Kirkland’s,AutoZone, Mr. AldersonPleas was a senior partner atDivision Controller with Malone & Hyde, one of the law firm of Menzies, Rainey, KizerFleming Companies, Inc. where he served in various capacities since 1988. Mr. Pleas worked with EY prior to joining Malone & Alderson.Hyde, and he received his BBA in accounting from Delta State University. Mr. Alderson’s 28 years with Kirkland’s providesPleas is a retail industry executive who brings to the Board of Directors with significant Company knowledgeyears of financial and retailpublic-company management experience. Mr. Alderson hasHe is also servedan audit committee financial expert based on his role as Controller of AutoZone and his experience preparing and evaluating the boardfinancial statements of Bojangles’, Inc. since April 2015.a large publicly traded company.

Incumbent Director Not Standing forRe-Election

Carl T. Kirkland

PrincipalOccupation: RetiredCo-Founder of Kirkland’s, Inc.

Age: 7476

DirectorSince: 1966

Mr. Kirkland has served as a director of the Company since heco-founded Kirkland’s in 1966, and he served as Chief Executive Officer from 1966 through March 2001 and President from 1966 through November 1997.

Mr. Kirkland also served as Chairman of the Board of Directors from June 1996 to November 2004. He has over 4550 years of experience in the retail industry. Mr. Kirkland also servesserved on the Board of Directors of Hibbett Sporting Goods, Inc. Mr. Kirkland brings to the Board of Directors a knowledge of the history and evolution of Kirkland’s from its inception; his experience as a long-standing director of another retailer, Hibbett Sporting Goods, also informs his understanding of the business and its place in the context of the retail sector. Mr. Kirkland also serves on the Board of Directors of The Bank of Jackson, located in Jackson, Tennessee.

Jeffery C. OwenIn Memoriam - Robert E. Alderson

Principal Occupation: Private Investor.

Age: 45

Director Since: 2015

Robert Alderson, a member of the Kirkland’s Board since 1986, passed away unexpectedly on November 22, 2016. Mr. Owen worked over 20 years for Dollar General,Alderson served Kirkland’s in a variety of executive roles, including Chief Operating Officer, President, and Chief Executive Officer until his retirement in 2015. He was a driving force behind the nation’s largestCompany’s expansion from a small boxregional retailer of discount consumable basic merchandise. Most recently, he served as16 stores to a national chain with over 400 stores in 36 states. A prominent Tennessee attorney for over 40 years, Mr. Alderson successfully led the Senior Vice President, Operations from 2011 to 2014. Prior to his appointment as Senior Vice President, Operations, Mr. Owen served as the Vice President, Operations for Dollar General from 2006 to 2011. Mr. Owen received his undergraduate degree and MBA from Vanderbilt University. Mr. Owen is a retail industry executive who brings to the board years of operations and public-company management experience.Company through its initial public offering in 2002.

IV. INFORMATION ABOUT THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

Board Leadership Structure

Our business is managed under the direction of our Board of Directors. The Board of Directors delegates the conduct of the business to our senior management team. The Board of Directors of the Company is led by a Chairman of the Board and chairmen of the various committees of the Board of Directors. The Company has determined that it is appropriate for the Chairman of the Board of Directors to be an independent director, so that the same person does not fill the roles of chairman and chief executive officer. While such a dual role is permitted, the Company desires to establish a measure of board independence by appointing an independent director to serve as Chairman of the Board of Directors. If the CEO or another insider ever serves as Chairman of the Board of Directors in the future, we would anticipate that a Lead Independent Director, elected by the independent directors, would preside over executive sessions of the independent directors. In addition to preserving the independence of the Board of Directors as a whole, each of the committees of the Board of Directors is chaired by an independent director (and is comprised only of independent directors), in accordance with the applicable exchange rules.listing standards of The Nasdaq Stock Market (“Nasdaq”). The Board of Directors believes its current structure and operation, as described herein, properly safeguards the independence of the Board of Directors.

Code of Business Conduct and Ethics

The Company has adopted a Code of Business Conduct and Ethics that applies to its directors, officers and employees, including the Company’s principal executive officer, principal financial officer and principal accounting officer. This Code of Business Conduct and Ethics may be found on the Company’s investor website at www.kirklands.com under “Investor and Media Relations -– Corporate Governance -– Governance.”

Board Independence

Consistent with the Nasdaq listing standards of The Nasdaq Stock Market (“Nasdaq”) and the regulations promulgated by the Securities and Exchange Commission (“SEC”),SEC, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by the Boardits board of Directors.directors. After review of all relevant transactions and relationships between each director, or any of his or her family members, and the Company, its senior management and its independent auditors, the Board of Directors affirmatively has determined that the following directors, constituting a majority of the Company’s directors, are independent directors within the meaning of the applicable Nasdaq listing standards: Steven J. Collins, Carl T. Kirkland, R. Wilson Orr, III, Ralph T.

Parks,Charlie Pleas, III, Miles T. Kirkland, Murray M. SpainSusan S. Lanigan, and Jeffery C. Owen. The Company’s independent directors meet in regularly scheduled executive sessions at which only independent directors are present.

Board of Directors and Committee Meetings

During fiscal 2014,2016, the Board of Directors held sixfive regular meetings. All directors attended at least 75% of the meetings of the Board of Directors and all committees of the Board of Directors on which they served. While the Company encourages all members of the Board of Directors to attend annual meetings of the Company’s shareholders, there is no formal policy as to their attendance. All members of the Board of Directors attended the 20142016 annual meeting of shareholders.shareholders, except for Mr. Collins.

The Board of Directors has three standing committees: an Audit Committee, a Compensation Committee and a Governance and Nominating Committee.

Audit Committee

The Board of Directors has adopted a written charter that outlines the duties of the Audit Committee. A copy of this charter is available on the Company’s investor website at www.kirklands.com under “Investor and Media Relations – Corporate Governance -– Committees.” The principal duties of the Audit Committee, among other things, are to:

Members: Mr. OrrPleas (Chairman), Mr. Parks,Owen, Mr. M. KirklandOrr and Mr. Spain.Collins. All of the members of the Audit Committee are “independent” as defined by the applicable rules and regulations of Nasdaq and the SEC.

The Board of Directors has determined that the Audit Committee does not haveChairman Charlie Pleas, III is an “audit committee financial expert” as that term is defined in the SEC’s rules and regulations. However, theThe Board of Directors also believes that each of the members of the Audit Committee has demonstrated that he is able to read and understand fundamental financial statements, including the Company’s balance sheets, statements of operations and statements of cash flows.

Because the Board of Directors believes that the current members of the Company’s Audit Committee are qualified to carry out all of the duties and responsibilities of the Company’s Audit Committee, the Board of Directors does not believe that it is necessary at this time to actively search for an outside person to serve on the Board of Directors who would qualify as an audit committee financial expert.

Number of Meetings in fiscal 2014: 102016: 9

Compensation Committee

The Board of Directors has adopted a written charter that outlines the duties of the Compensation Committee. A copy of this charter is available on the Company’s investor website at www.kirklands.com under “Investor and Media Relations – Corporate Governance -– Committees.” Under the terms of its charter, the Compensation Committee is directly responsible for establishing compensation policies for our executive officers. The principal duties of the Compensation Committee, among other things, are to:

Members: Mr. Collins (Chairman), Mr. SpainOwen, Mr. M. Kirkland and Mr. Orr.Ms. Lanigan. All of the members of the Compensation Committee are “independent” as defined by the applicable rules and regulations of Nasdaq and the SEC.

Number of Meetings in fiscal 2014: 32016: 5

Governance and Nominating Committee

The Board of Directors has adopted a written charter that outlines the duties of the Governance and Nominating Committee. A copy of this charter is available on the Company’s investor website at www.kirklands.com under “Investor and Media Relations – Corporate Governance -– Committees.” The principal duties of the Governance and Nominating Committee, among other things, are to:

Members: Mr. ParksOrr (Chairman), Mr. Collins, Mr. OrrMs. Lanigan and Mr. Spain.M. Kirkland. All of the members of the Governance and Nominating Committee are “independent” as defined by the applicable rules and regulations of Nasdaq and the SEC.

Number of Meetings in fiscal 2014: 12016: 5

Director Nomination Process

The Governance and Nominating Committee will consider director candidates who have relevant business experience, are accomplished in their respective fields, and who possess the skills and expertise to make a significant contribution to the Board of Directors, the Company and its shareholders. The Governance and Nominating Committee will consider nominees for election to the Board of Directors that are recommended by shareholders, provided that a complete description of the nominees’ qualifications, experience and background, together with a statement signed by each nominee in which he or she consents to act as such, accompany the recommendations. Such recommendations should be submitted in compliance with the procedures outlined on page 3635 under the heading “Shareholder Proposals for the 20162018 Annual Meeting.” The Governance and Nominating Committee applies the same criteria to nominees recommended by shareholders as discussed above.

While the Governance and Nominating Committee does not have a specific diversity policy relating to the composition of the Board of Directors, the Board of Directors does value diversity. The Board of Directors considers a number of diversity factors in evaluating director candidates including, without limitation, professional experience, education, race, gender and national origin, but does not assign any particular weight or priority to any particular factors. Instead, the Board of Directors considers each individual candidate in the context of the current perceived needs of the Board of Directors as a whole.

In identifying prospective director candidates, the Governance and Nominating Committee may seek referrals from other members of the Board of Directors, management, shareholders and other sources. The Governance and Nominating Committee also may, but need not, retain a search firm in order to assist it in identifying candidates to serve as directors of the Company. The Governance and Nominating Committee utilizes the same criteria for evaluating candidates regardless of the source of the referral. When considering director candidates, the Governance and Nominating Committee seeks individuals with backgrounds and qualities that, when combined with those of our incumbent directors, provide a blend of skills and experience to further enhance the Board of Director’sDirectors’ effectiveness.

In connection with its annual recommendation of a slate of nominees, the Governance and Nominating Committee may also assess the contributions of those directors recommended forre-election in the context of the Board of Directors evaluation process and other perceived needs of the Board of Directors.

When considering whether the directors and nominees have the experience, qualifications, attributes and skills, taken as a whole, to enable our Board of Directors to satisfy its oversight responsibilities effectively in light of the Company’s business and structure, our Board of Directors focuses primarily on the information discussed in each director’s biographical information set forth on pages 6 to 9 of this Proxy Statement. Each of the Company’s directors possesses high ethical standards, acts with integrity and exercises careful, mature judgment. Each is

committed to employing their skills and abilities to aid the long-term interests of the stakeholders of the Company. In addition, our directors are knowledgeable and experienced in one or more business endeavors, which further qualify them for service as members of the Board of Directors.

New directors participate in an orientation program that includes discussions with senior management, a store visit, and their review of background materials on our strategic plan, organization and financial statements. We encourage each director to participate in continuing educational programs that are important to maintaining a director’s level of expertise to perform his or her responsibilities as a Board member.

In 2015, this process resulted in2017, the Governance and Nominating Committee’s recommendationCommittee recommended only one Class III nominee to the Board for election at the Annual Meeting. The current size of the Board of Directors andhas been set at eight members, having been reduced from nine members following the death of Mr. Alderson in November of 2016. With the retirement of Mr. Carl Kirkland at the Annual Meeting, there will be a vacancy on the Board of Director’s nomination,one Class III director with a three-year term expiring 2020. The Board is continuing its search for a qualified candidate to fill the Class  III vacancy and expects to fill this vacancy by the next Annual Meeting of Shareholders.

Corporate Governance Guidelines and Director Retirement Policy

In December of 2016, our Board of Directors adopted a set of Corporate Governance Guidelines which governs the conduct of our Board. These Guidelines include anon-management director retirement policy, which requires any director who reaches the age of 70 to retire effective as of the three incumbent directors named indate of the next annual meeting of shareholders. In accordance with this Proxy Statement and proposedpolicy, Mr. Carl Kirkland is not standing for election by youre-election at the upcoming Annual Meeting. Our Corporate Governance Guidelines are posted on our web site at www.kirklands.com (under “Corporate Governance” on the Investor and Media Relations page), and we will provide a copy of the Guidelines (or any of our other corporate governance documents) to any shareholder or other person upon receipt of a written request addressed to the Corporate Secretary of Kirkland’s at 5310 Maryland Way, Brentwood, TN 37027.

Board of Directors Role in Risk Oversight

The Board of Directors takes an active role in risk oversight. The Board of Directors exercises its risk oversight function through the full Board of Directors and each of its committees. The Audit Committee of the Board of Directors takes an active risk oversight role by meeting with the Company’s senior management team on a regular basis and reviewing and approving key risk policies and risk tolerances. The Audit Committee is responsible for ensuring that the Company has in place a process for identifying, prioritizing, managing, and monitoring its critical risks. Furthermore, the Board of Directors, with input from the Audit Committee, regularly evaluates our management infrastructure, including personnel competencies and technologies and communications, to ensure that key risks are being properly evaluated and managed. Finally, the Compensation Committee of the Board of Directors reviews any risks associated with the Company’s compensation practices. In the Compensation Committee’s view, our compensation policies do not encourage risk-taking, in part because the compensation packages are weighted towards long-term vesting equity as opposed to cash or immediately vested equity awards.

Board of Directors Compensation

Retainer and Fees for Employee Directors

Any director who is also one of our employees does not receive any additional compensation for his or her service as a director of Kirkland’s.

Retainer and Fees forNon-employee Directors

The Compensation Committee has approved the following compensation fornon-employee directors for their service:

Fiscal2016CashCompensation.Each  In fiscal 2016, eachnon-employee director iswas paid an annual retainer of $30,000, as well as $1,000 for each board meeting attended in person. In addition to the foregoing retainer and meeting fees, ournon-employee Chairman of the Board of Directors receivesreceived an additional annual retainer of $30,000.

Fiscal2017CashCompensation. At our December 2016 Board meeting, the Compensation Committee and the Board approved the following changes to our Board cash compensation. Effective February 1, 2017, eachnon-employee director is now paid an annual retainer of $40,000, and the board meeting attendance fees of $1,000 per meeting have been eliminated. In addition to the increase in the Board retainer, ournon-employee Chairman of the Board of Directors will now receive an additional annual retainer of $40,000 rather than $30,000. There were no changes to the equity compensation or the Board Committee compensation.

EquityCompensation. On the date of each Annual Meeting of Shareholders, each person serving as anon-employee director at the conclusion of the meeting receives a grant of 4,000 restricted stock units (“RSUs”), each representing the right to receive one share of our common stockCommon Stock upon vesting. The RSUs vestone-year from the date of grant (or on apro-rata basis relative to the termination date if the director’s service to the Company terminates prior to theone-year anniversary of the grant date). In the event of a change in control of the Company (a “Change in Control”), the Company reserves the right to substitute cash or other substitute consideration for the right to receive shares hereunder, provided that at the time of that Change in Control, such substitute consideration has a value (as reasonably determined by the Board of Directors) equal to the then current Fair Market Valuefair market value of the shares subject hereto and provided further that such substitute consideration vests and becomes payable on the same basis as provided herein with respect to these UnitsRSUs and the Sharesshares subject hereto (or on such accelerated basis as may then be determined by the Board of Directors, in its discretion).

BoardofDirectorsCommittees. Eachnon-employee director who is a member of our Audit Committee is paid an annual retainer of $10,000, and the Chairman of the Audit Committee receives an annual retainer of $20,000. Eachnon-employee director who is a member of our Compensation Committee receives an annual retainer of $7,500, and the Chairman of the Compensation Committee is paid an annual retainer of $15,000. Eachnon-employee director who is a member of the Governance and Nominating Committee is paid an annual retainer of $2,500$7,500, and the Chairman of the Governance and Nominating Committee receives an annual retainer of $5,000.$15,000.

Director Compensation Table

The following table provides information about all compensation earned in fiscal 20142016 by the individuals who served on our Board of Directors:

The following table shows, as of January 31, 2015,28, 2017, the number of all outstanding stock options and RSUs held bynon-employee directors:

Shareholder Communications with Members of the Board of Directors

Pursuant to the policy of the Board of Directors, all communications directed to the Board of Directors will be delivered to the Board of Directors. ShareholdersAny party interested in communicating directly with the Board of Directors may contact the Board of Directors by writing to them c/o Kirkland’s, Inc., 5310 Maryland Way, Brentwood, Tennessee,TN, 37027, Attention: Adam C. Holland.Carter R. Todd.

V. SECURITY OWNERSHIP OF KIRKLAND’S

Security Ownership of Certain Beneficial Owners and Management

The following table shows, as of April 13, 20156, 2017 (except as set forth below), the number of shares of Common Stock beneficially owned by:

(4)	Includes (i) options to purchase 37,06457,688 shares of Common Stock held by Mr. Holland, (ii) 3,9063,750 options that will vest by June 2015,2017, and (iii) 4,0004,358 RSUs that will vest by June 2015.2017.

(5)(4)

Includes (i) options to purchase 5,000 shares of Common Stock held by Mr. Collins and (ii) 4,000 RSUs that will vest in June 2015.2017.

(6)(5)

Number of shares beneficially owned as of April 14, 2015. Includes (i) options to purchase 20,00015,000 shares of Common Stock held by Mr. Carl Kirkland and (ii) 4,000 RSUs that will vest in June 2015.2017.

(7)(6)

Includes (i) options to purchase 7,500 shares of Common Stock held by Mr. Miles Kirkland and (ii) 4,000 RSUs that will vest in June 2015.2017.

(8)(7)

Includes 4,000 RSUs held by Mr. Orr that will vest in June 2015.2017.

(8)	Includes 4,000 RSUs held by Mr. Owen that will vest in June 2017.

(9)	Includes 4,000 RSUs held by Mr. ParksMs. Lanigan that will vest in June 2015.2017.

(10)	Includes (i) options to purchase 20,000 shares of Common Stock4,000 RSUs held by Mr. Spain, and (ii) 4,000 RSUsPleas that will vest in June 2015.2017.

(11)

Obtained from Form SC 13G13G/A filed on February 13, 2015.2017. Includes 1,334,361 shares to which Nokomis Capital, L.L.C. has shared voting and investment power. Includes 1,334,361 shares to which Brett Hendrickson, the principal of Nokomis Capital, L.L.C., has shared voting and investment power. Mr. Hendrickson’s address is 2305 Cedar Springs Rd., Suite 420, Dallas, TX 75201.

(12)	Obtained from Form SC 13G/A filed on February 12, 2015.14, 2017. Includes 1,349,700 shares to which Paradigm Capital Management, Inc. has sole voting and investment power.

(13)	Obtained from Form SC 13G/A filed on January 15, 2015.12, 2017. Includes 1,691,022 shares to which Blackrock, Inc. has sole voting power and 1,718,198 shares to which Blackrock, Inc. has sole investment power.

(14)	Obtained from Form SC 13G filed on February 9, 2017. Includes 883,654 shares to which Dimensional Fund Advisors LP has sole voting power and 938,949 shares to which Dimensional Fund Advisors LP has sole investment power.

(15)	Obtained from Form SC 13G/A filed on January 11, 2017. Includes 1,468,425 shares to which Royce & Associates LP has sole voting and investment power.

(16)	Includes (i) options to purchase 414,553476,905 shares of Common Stock.Stock, and (ii) 55,595 RSUs that will vest in June 2017.

VI. EXECUTIVE COMPENSATION

Compensation Discussion and Analysis (“CD&A”)

Overview

The Compensation Committee of the Board of Directors has developed and implemented compensation policies, plans and programs that seek to enhance our profitability, and thus shareholder value, by aligning the financial interests of our senior management with those of our shareholders. Our compensation arrangements are designed to attract and retain corporate officers and other key employees and to motive them to perform to the full extent of their abilities, in the best long-term interests of the shareholders.

During fiscal 2014,2016, the Compensation Committee held 35 meetings and took the following significant actions:

Following the end of fiscal 2014 and as further discussed below under the heading—“Alderson Letter Agreement”, the Compensation Committee approved a letter agreement with Mr. Alderson in connection with his retirement from his role as the Company’s Chief Executive Officer on February 8, 2015. On the same day, the Compensation Committee appointed Mr. Madden as the Company’s new President and Chief Executive Officer and Mr. Holland as the Company’s Vice President and Chief Financial Officer.

Compensation Committee Interlocks and Insider Participation

Our Compensation Committee is comprised entirely of the following independent directors: Steven J. Collins (chairman)(Chairman), Murray M. SpainMiles T. Kirkland, Jeffery C. Owen and R. Wilson Orr.Susan S. Lanigan. Mr. Collins previously served as the Company’s Chief Financial Officer from 1997 to 1998. Except as described in the preceding sentence, no member of our current Compensation Committee is or has been one of our officers or employees or has had any relationship requiring disclosure under the SEC rules. In addition, during fiscal 2014,2016, none of our executive officers served as any of the following:

Limited RelianceCompensation Consultant

In 2016, the Compensation Committee retained Aon Hewitt (“AH”), as the Compensation Committee’s independent compensation consultant, to perform a review and benchmarking of the Company’s executive officer compensation programs to assist in determining compensation components and levels for 2017. AH prepared a report (the “2017 Compensation Report”), utilizing a peer group of publicly-traded retailers that fell within a reasonable range (both above and below the Company) of comparative factors such as revenue, market capitalization and number of stores. AH also provided information about market trends in executive officer pay practices and advised the Company on Outside Advisorscompensation program design and structure. In addition, the 2017 Compensation Report compared the compensation paid to the Company’s top executives to the compensation paid to their counterparts at the peer companies. The following is a list of companies included in the peer group used for the 2017 Compensation Report:

In setting executive officer compensation in the first quarter of 2017, the Compensation Committee consulted with AH and referenced the 2017 Compensation Report for an understanding of market practices and competitive compensation levels.

The Compensation Committee has sought inputdetermined that AH was independent and that its engagement did not present any conflicts of interest. AH also determined that it was independent and free from compensation consultantsconflict with respect to the engagement and confirmed this in a written statement delivered to the past and may do so again in the future, but the advice of such consultants has never been central to our executive compensation process or philosophy. Rather, our executive compensation process is driven primarily by the experience and judgmentChair of the Compensation Committee’s members. When applying that judgment, individual members ofCommittee. AH reports directly to the Compensation Committee mayon all work assigned by the Compensation Committee. AH also interacts with management when necessary and appropriate to carry out its assignments. AH, in its discretion, from time to time, reviewseeks confirmation from management regarding the public filingsaccuracy of other companies, butinformation that is included in materials presented to the Compensation Committee has not identified a specific compensation peer group or otherwise engaged in formal benchmarking.Committee.

Consideration of Results of Shareholder Advisory Votes on Executive Compensation

At theour 2016 Annual Meeting of Shareholders, held on June 11, 2014, we conducted our third “Say-On-Pay”a“Say-On-Pay” shareholder advisory vote, as required by the Dodd-Frank Act. The Compensation Committee appreciates that over 98%97% of the shares voting approved the executive compensation discussed and disclosed in the Compensation Discussion and Analysis, the compensation tables, and the narrative executive compensation disclosure contained in the 20142016 Proxy Statement. Our Compensation Committee interprets the results of this vote as an endorsement of existing programs and therefore we have not made material changes to our approach to executive officer compensation. This year we are again providing shareholders with an opportunity to express their views on this topic in another “Say-On-Pay”“Say-On-Pay” shareholder advisory vote. For more information, please see “Proposal No. 32 – Advisory Vote Related to Executive Compensation” on page 4.

At the annual meeting of shareholders on June 1, 2011, our shareholders expressed a preference that advisory votes on named executive officer compensation occur on an annual basis. In accordance with the results of this vote, the Board of Directors determined to implement an annual advisory vote on named executive compensation until the next requiredofficer compensation. At this Annual Meeting, we are having another advisory vote on the frequency of shareholder advisory votes on executive compensation. For more information, please see “Proposal 3 – Advisory Vote on the compensationFrequency of executives, which is scheduled to occur at the 2017 annual meeting.Advisory Vote on Executive Compensation” on page 5.

Role of Executives in Establishing Compensation

The Compensation Committee approves and recommends to the Board of Directors all compensation and equity awards to four individuals who were areour named executive officers in 2014: Robert E. Alderson, our Chief Executive Officer (who retired in February 2015);2016: W. Michael Madden, our President and Chief Operating Officer (who becameExecutive Officer; Mike Cairnes, our Executive Vice President and Chief Executive Officer in February 2015);Operating Officer; Michelle R. Graul, our Executive Vice President of Stores and Merchandising;Stores; and Adam C. Holland, our Chief Accounting Officer (who became our Vice President and Chief Financial Officer in February 2015).Officer. The Compensation Committee reviews the performance of the named executive officers through internal committee discussions and discussions with the executives, and determines the appropriate level of compensation on an annual basis.

Mr. Alderson and Mr. Madden (who in 2014 were respectively our Chief Executive Officer and Chief Operating Officer) regularly attendattends portions of the Compensation Committee meetings and provideprovides assistance in gathering data and information designed to support the decision-making process of the Compensation Committee. However, both officers arehe is excused by the Compensation Committee from such meetings when decisions concerning executive compensation are made. Additionally, the Compensation Committee holds separate meetings outside the presence of management, at which executive compensation decisions are made.

Compensation Philosophy

The key objective of our compensation programs is to attract and retain highly qualified key executives. Once executives have joined the company, our compensation programs must provide the appropriate level of incentives in the form of cash and equity to maintain a high level of competitiveness and thereby retain key managers. We offer our executives a combination of cash bonus incentives, equity-based compensation in the form of stock options and RSUs, and the opportunity to participate in an employee stock purchase plan. We believe these incentive programs align with our overall goal of maximizing our long-term financial results and shareholder value.

Elements of Compensation

Executive pay is structured to consist of the following components:

The Compensation Committee believes that a significant portion of total compensation for our executives should be allocated to equity incentives that align pay with shareholder value. In addition, cash bonuses are available to reward executives for achieving company performance goals and individual goals that contribute to increasing the value of the company.

Base Salary

We provide our named executive officers with base salaries to compensate them for services rendered during the year. The Compensation Committee believes that competitive salaries must be paid in order to attract and retain high-quality executives. The Compensation Committee annually reviews the base salary for executive officers and makes adjustments to individual base salary rates when necessary or otherwise appropriate.

Among other things, individual base salary adjustments take into account individual performance contributions for the year, as well as sustained performance contributions over a number of years, significant changes in responsibilities, if any, and cost of living adjustments. The assessment of individual performance is subjective and is not intended to correlate to specific corporate performance measures. The Compensation Committee’s decisions regarding fiscal 20142016 and fiscal year 20152017 salary increases are reflected below:

Mr. Alderson retired as Chief Executive Officer of the Company effective February 8, 2015. In connection with Mr. Alderson’s retirement, Mr. Madden was appointed the Company’s Chief Executive Officer.

Bonus andNon-Equity Incentive Plan Compensation

Our cash bonus program compensation is provided under the Company’s Amended and Restated 2002 Equity Incentive Plan and has been designed to provide a short-term incentive to our executives based upon predetermined performance goals for the company and each individual executive. The Compensation Committee determines the amount of the target bonus annually for each executive expressed as a percentage of base salary.

For fiscal 2014,2016, the target bonus for the named executive officers werewere: 100% of base salary for Mr. Alderson;Madden; 75% of base salary for Mr. Madden;Cairnes and Ms. Graul; and 60% of base salary for Ms. Graul, and 40% of base salary for Mr. Holland. These bonusesBonuses under this program for Mr. Alderson,Madden, Mr. Madden,Cairnes, Ms. Graul, and Mr. Holland were based entirely on Company performance goals.

Company performance is measured based solely upon the achievement of a specified level of earnings before adjustments for interest and taxes (“EBIT”) as determined through our annual budgeting process. The annual budget is approved by the Board of Directors at the beginning of the fiscal year. The reliance on EBIT is driven by the Compensation Committee’s belief in using a metric that is more closely aligned to bottom line earnings and provides a measure of asset productivity by including depreciation and amortization in the measurement of performance.

TheFor fiscal 2016, the Company performance goal iswas structured such that 100% payout of the applicable target bonus is attained upon achieving 100% of the Company EBIT goal, with the threshold bonus (50%(30% of target payout) attained upon achievement of 75%80% of the EBIT goal, maximum bonus (150% of target payout) attained upon achievement of 150%125% of the EBIT goal and linear interpolation used to determine payouts between these levels of EBIT performance.

Calculation of the performance bonus earned by each executive was based on the Company’s final audited financial statements. The Compensation Committee reserves the right to adjust the Company performance target for extraordinary andnon-recurring events after it has been established; however, it has not done so during the last sevennine fiscal years. The Compensation Committee may also award discretionary bonuses from time to time to recognize significant achievements and service to the Company.

As discussed above, thenon-equity incentive plan compensation of our named executive officers during fiscal 20142016 was based entirely on the achievement of Company financial performance goals, specifically certain levels of EBIT as determined by the Compensation Committee for purposes of our cash bonus program. The Company’s EBIT target for fiscal 20142016 was $32,085,000.$34,860,000. The actual EBIT achieved by the Company in fiscal 2014,2016, as determined prior to bonus payments under the cash bonus program, was $31,972,568$17,000,000 (which was 99.6%48.8% of the target EBIT amount). PursuantUnder the terms of the Company’s fiscal 2016non-equity incentive plan, bonuses are not paid to this determination and consistent with the scale for levels betweenplan participants unless at least 75% and 100% achievement of the EBIT target as described above in paragraph four under the heading “Bonus and Non-Equity Incentive Plan Compensation”, 99.6% achievement of our EBIT goal resulted in cash bonus payments to our named executive officers at 99.2% of their applicable bonus targets. The actual amount of each cash bonus payment to named executive officers is shown in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table below.

achieved. Because the Company’sminimum EBIT target for fiscal 20142016 was substantiallynot achieved, the Compensation Committee awarded eachdid not award bonuses to the named executive officer an additional discretionary bonus as if the Company’s EBIT target was achieved at 100%. The amount of such discretionary bonusofficers for each named executive officer was as follows: $4,360 for Mr. Alderson, $2,220 for Mr. Madden, $1,536 for Ms. Graul and $640 for Mr. Holland.fiscal 2016.

Equity Based Incentives

Equity awards are generally made to named executive officers upon hire. Thereafter, awards are generally made annually, at the discretion of the Compensation Committee, as part of the Compensation Committee’s annual compensation evaluation process. Equity awards may also be made in special circumstances (for example, to recognize a promotion or achieve a particular retention objective), but these situations are rare. There were no such special circumstances grants in fiscal 2014.2016. The exercise price of each stock option award is based on the closing price of our common stockCommon Stock on the date of the grant (if not a business day, the immediately preceding business day). For newly hired employees receiving stock options, the grant of such award occurs on the later of the first day of employment or upon Compensation Committee approval, with the exercise price being based upon the closing price of our common stockCommon Stock on such date.

The Compensation Committee, in its discretion, evaluates potential equity awards primarily based on the number of shares to be allocated in relation to the number of shares outstanding, with additional consideration given to the value of the award in relation to total compensation. The Compensation Committee continually evaluates the type of equity award that is appropriate at the given time in response to changing business conditions with a goal of

providing the type of equity award most appropriate to provide the right balance between retention and incentive to build long-term shareholder value. Equity awards have vesting requirements and terms that are similar among the recipients of the awards, providing incentives for employees to stay with the Company and work together to achieve common goals. Stock option awards typically provide for three-year or four-year vesting,Beginning with one-third or one-fourth vesting on the first anniversary of the grant date, and the remainder vesting over the succeeding eight quarters or 12 quarters. Beginning withstock option grants to employees in fiscal 2010, the vesting period was increased from three years to four years in order to further encourage retention of executive officers and to slow recognition of the expense associated with such awards for income statement purposes. Restricted stock unitPrior to the RSU grants in fiscal 2016, the Company’s RSU awards generally provideprovided for three-year “cliff” vesting. Beginning with the RSU grants to employees in fiscal 2016, the RSU awards vest ratably over four years.

On June 12, 2014,May 31, 2016, in connection with the Compensation Committee’s annual compensation evaluation process, the Compensation Committee made the following annual equity awards to named executive officers: (a) Mr. Alderson was granted stock options with respect to 27,500 shares and 11,000 RSUs; (b) Mr. Madden was granted stock options with respect to 25,00030,000 shares and 10,00015,000 RSUs; (c)(b) Ms. Graul was granted stock options with respect to 17,50015,000 shares and 7,0007,500 RSUs; and (d)(c) Mr. Holland was granted stock options with respect to 7,50010,000 shares and 3,0005,000 RSUs. The size of these equity awards was determined by the Compensation Committee after a review of fiscal 20132015 performance (and, with respect to Mr. Madden, Ms. Graul and Mr. Holland, after consultation with Mr. AldersonMadden regarding each executive’s performance in fiscal 2013)2015) and taking into consideration the grantees’ other compensation, the value of our shares on the date of grant and the Compensation Committee’s subjective judgment regarding the size of award necessary to strongly encourage both the retention of the grantees and their continued efforts on our behalf while managing the dilutive impact of the awards. Mr. Cairnes was not employed by the Company when the fiscal 2016 equity awards were made, and he was later awarded stock options with respect to 12,000 shares and 6,000 RSUs when he joined the Company in November of 2016.

Perquisites

We do not provide significant perquisites or personal benefits to our executive officers that are not readily available to other employees. The Compensation Committee evaluated the limited perquisites offered to our executive officers and in March 2014 determined that our company-leased vehicle program should be terminated. In connection with the termination of the vehicle program and to ease the transition out of such program, the Compensation Committee approved the following one-time payments to our named executive officers: $8,627 for Mr. Alderson, $6,379 for Mr. Madden, $6,605 for Ms. Graul and $6,636 for Mr. Holland.

Severance Benefits

The specific terms of our severance arrangements are discussed below under the heading “Employment Arrangements and Post-Employment Compensation and Benefits.”

The Compensation Committee has noted the prevalence of severance arrangements among our peer companies and believes that such arrangements, when properly tailored, are appropriate and necessary. The Compensation Committee also believes that reasonable severance benefits (i) should be established with reference to an executive’s position and current cash compensation opportunities, and (ii) should be conditioned upon execution of a release of claims against the employer and its affiliates. Accordingly, the Compensation Committee has approved modest severance benefits for both Mr. Madden, Mr. Cairnes and Ms. Graul pursuant to which severance is payable upon a termination without Causecause or a resignation for Good Reason,good reason, subject in each case to Mr. Madden or Ms. Graulthe executive executing a release of claims in favor of the Company. With respect to Mr. Alderson, his specific severance benefits are discussed in detail below under the heading “Employment Arrangements and Post-Employment Compensation and Benefits.” Additionally, in connection with Mr. Alderson’s retirement on February 8, 2015, the Company entered into a letter agreement with Mr. Alderson as discussed in detail below under the heading “Alderson Letter Agreement.”

The severance benefits for Mr. Madden and Ms. Graul remained consistent with those benefits provided in prior years.

Post Fiscal 2014 Executive Agreements

Alderson Letter Agreement

In connection with Mr. Alderson’s retirement on February 8, 2015 and in recognition of his long tenure of service to the Company, we entered into a letter agreement with Mr. Alderson on February 27, 2015 (the “Alderson Letter Agreement”). The Alderson Letter Agreement provided the following additional benefits in exchange for Mr. Alderson’s agreement to execute a general release of claims in favor of the Company:

•

the Company will reimburse the supplemental Medicare premiums for Mr. Alderson and his spouse until Mr. Alderson’s 72nd birthday (the “Health Premiums”);

Mr. Alderson’s existing benefits (that were in effect as of the end of fiscal 2014) are described in detail below under the heading “Employment Arrangements and Post-Employment Compensation and Benefits.”

Tax Implications - Deductibility of Executive Compensation

Section 162(m) of the Internal Revenue Code limits our ability to deduct for tax purposes compensation in excess of $1,000,000 that is paid to our principal executive officer or any one of our three highest paid executive officers, other than our principal executive officer or principal financial officer, who are employed by us on the last day of our taxable year, unless, in general, the compensation is paid pursuant to a plan that has been approved by our shareholders and is performance-related andnon-discretionary. The Compensation Committee will review and consider the deductibility of executive compensation under Section 162(m) and may authorize certain payments in excess of the $1,000,000 limitation. The Compensation Committee believes that it needs to balance the benefits of designing awards that aretax-deductible with the need to design awards that attract, retain and reward executives responsible for our success.

During the 2013 Annual Meeting of Shareholders, we obtained shareholder approval of the Company’s 2002 Equity Incentive Plan, as amended and restated. Among the changes reflected in that plan restatement are changes intended to provide us with greater flexibility in structuring compensation to be exempt from the limits of Section 162(m) (including the ability to grant our annual cash performance bonuses under the 2002 Equity Incentive Plan, as amended and restated).

Stock Ownership and Retention Guidelines

We do not have a formal policy in place stipulating levels of share ownership for executives. TheIn 2016, our Board of Directors and the Compensation Committee encourage employeeadopted stock ownership throughguidelines for our senior executives. These guidelines are designed to encourage our executives to have a meaningful equity ownership in our company, thereby linking their interests with those of our shareholders. These guidelines provide that within five years of first becoming subject to the grantingplan, each executive must own (by way of equity compensationshares owned directly or indirectly and throughshares represented by unvested time-based RSUs and the Company’s Employee Stock Purchase Plan. Additionally, our former Chief Executive Officer, Mr. Alderson, and our current Chief Executive Officer,intrinsic value of the shares of vested stock options) common stock with a value of three times (3x) base salary for Mr. Madden, have material ownership positionstwo times (2x) base salary for Mr. Cairnes and Ms. Graul, and one times (1x) base salary for Mr. Holland and other executives subject to these guidelines. The guidelines also provide that if an executive is not currently in compliance with this guideline (regardless of the Company. The Boardcompliance grace period), the executive must retain 50% of Directorsthe net shares (after satisfying any tax obligations and any required payments upon exercise) received upon vesting of RSUs or the Compensation Committee will continue to evaluateexercise of stock options. As of March 31, 2017, all of the lackNEOs (except for Mr. Cairnes, who joined the Company in November of a formal policy and guidelines on executive ownership of Company stock.2016) were in compliance with the guidelines.

Compensation Risk Analysis

Our Compensation Committee is keenly aware that compensation arrangements, if not properly structured, may encourage inappropriate risk-taking. In designing our compensation programs, the Compensation Committee seeks to mitigate such risk by (i) providing a meaningful portion of total compensation in the form of equity incentives that vest over multiple years, and (ii) capping annual cash bonuses for named executive officers at 200%, 150%, 120%112.5%, 112.5%, and 80%90% of base salary for Mr. Alderson,Madden, Mr. Madden,Cairnes, Ms. Graul, and Mr. Holland, respectively. Each of these elements is intended to encourage an appropriately long-term focus. Moreover, while we have not implemented a stock ownership guideline for our management team, we note that each of our named executive officers, including Mr. Madden, our current Chief Executive Officer, maintainmaintains a meaningful direct stock ownership position;position, which we believe provides a significant incentive for our team to ensure that their actions are focused on the creation of sustainable shareholder value and the avoidance of excessive risk.

Compensation Committee Report

We, the members of the Compensation Committee, have reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on our review and discussion with management, we have recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

The Compensation Committee

Steven J. Collins,Chair

Murray M. Spain

R. Wilson Orr, III

Summary Compensation Table

The following table provides information about all compensation earned in fiscal 20142016 by the individuals who served as Chief Executive Officer, Chief Operating Officer, Executive Vice President of Store Operations and MerchandisingStores, and Chief AccountingFinancial Officer. The Company did not have any other named executive officers during fiscal 2014.2016.

All Other Compensation

The following table provides additional detail for those items listed as “All Other Compensation” in the Summary Compensation Table for fiscal 2014:2016:

Description		Mr. Madden				Mr. Cairnes				Ms. Graul				Mr. Holland
401(k) Employer Matching Contribution(1)		$	3,549				—			$	5,155			$	4,290
Non-Qualified Deferred Compensation Plan Employer Matching Contribution(2)		$	6,251				—			$	6,251				—
Relocation Benefits(3)			—			$	78,217				—				—
Total		$	9,800			$	78,217			$	11,406			$	4,290

Grants of Plan-Based Awards

The following table sets forth information regarding grants of plan based awards to each of our named executive officers during our fiscal year ended January 31, 2015.28, 2017.

(4)	The amounts in the column under “Grant Date Fair Value of Option Awards” represent the fair value of the awards on the date of grant, as computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation — Stock Compensation.

Outstanding Equity Awards at 20142016 FiscalYear-End

The following table provides information about the outstanding equity awards as of January 31, 201528, 2017 for the executive officers named in our Summary Compensation Table.